How Qualtrics turned students into evangelists in the corporate world

By Richard Nieva , written on January 31, 2013

From The News Desk

If you want your product to catch on, make sure your customers can’t stop using it. That's a no brainer, but its easier said than done.

Data analytics company Qualtrics did it by getting customers hooked young -- targeting them as students, who then used the software when they entered the business world. That's why companies target education: to get students indoctrinated on their software and hardware.

The Valley is currently in the midst of love affair with the suddenly-sexy wave of consumerized enterprise companies like Box or Mixpanel -- a data metrics company that competes in roughly the same space. These smaller guys are buzzy now, but as they continue to scale, how do drum up organic support?

For the Provo, Utah-based Qualtrics, it was getting customers onboard early. The company is known for its enterprise data suite, which lets big companies like Pepsi, Microsoft and JetBlue do things like measure brand awareness and solicit product feedback. But once upon a time, Qualtrics was only available as an academic research tool, before it graduated to the general business world. Put more accurately, its customers graduated.

Founded in 2002, the company built academic research software that targets teachers, researchers and students, and lets them create quizzes, scrutinize experiment data and manage alumni contacts, among other things. Around 2008, after finishing college, many of them just continued to use the software when they entered the work force, says Ryan Smith, the company’s CEO. “You had this viral growth component. And that’s a true testament to the software because we really didn’t even have a marketing team until this year,” he says. The academic suite is still available and accounts for a big chunk of the business.

By a stroke of twisted luck*, the company benefitted from the economic crisis in 2008. As the country entered a recession, companies wanted to get smarter, and looked to analytics software to make the most out of every business situation, Smith says. Their newly graduated, entry-level employees had already had one in mind.

It has paid off recently. The company just announced it's reached over 5,000 clients. It also says it is experiencing quarter over quarter revenue growth and adding about 600 customers every quarter.

Smith says he owes a lot of the software’s success to its academic roots. For example, when originally designing the software, the team had to consider how it would be used in a university environment, across different departments, and in some cases, across different campuses. The company also had to keep in mind making the software licensable to a large group, like a lab, or a lone researcher who could use a do-it-yourself approach to perform advanced research. This came in handy when the company built its Site Interceptor software, which lets people who run websites make changes to the site on the fly, without needing to know much about the backend and getting too into the weeds.

The software has certainly gained traction since expanding past academia. Qualtrics closed a $70 million funding round in April from Sequoia and Accel. And if you know Accel’s game, you know this type of investment is standard fare for the firm (aside from Facebook and Groupon): mature company outside the Valley that probably doesn’t need the capital, but should take it anyway. Accel has done this time and time again, with Lightspeed, and most recently, Lynda.

Targeting students is nothing new. Apple ran the play brilliantly in the mid-2000s to get college kids hooked like crack to iPods. The company threw in a free one for students who bought a MacBook and could show a valid student ID. The ploy helped create a generation of fanboys that the company rode until its next great innovation in the iPhone. To be clear, Qualtrics will never be that prolific, and that is fine (unless it has an iPhone of its own up its sleeve, which I'll assume it doesn't.) But even the mightiest armor wears down, as Apple has begun to see from competitors like Samsung moving in. So Qualtrics still needs to stay on its toes.

*Possibly the only time the economic downturn has been described as “lucky.”

[Image courtesy: velkr0]